RBI monetary policy announcement brings cheer to real estate sector

RBI has today taken an unconventional step to cut repo rate by 35 bps in its third bi-monthly monetary policy. The step is intended to kickstart the economy. The six-member monetary policy committee headed by RBI Governor Shaktikanta Das, decided to reduce key repo rate by 35 basis points to 5.40 per cent from 5.75 per cent on Wednesday with immediate effect. Now RBI’s policy repo rate is at an all-time low of 5.40%. The Real estate sector, which is the 2nd largest employment generator, also had several expectations from the monetary policy and this move, it said, will lift the industry sentiments. 

On the same Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani said, "We definitely welcome this move which will lift industry sentiments. The real estate sector has been looking forward to such initiatives to boost sales. It will support growth and ease the liquidity crunch in the economy. We hope that the current rate cut would translate into lower EMIs and help soften home loan rates and also boost sales. It will help to ease the pressure off the market by attracting buyers to invest in the real estate sector. Real estate sector is one of the few sectors which have the potential to kick start a sluggish economy. The forthcoming festive season will further boost real estate sector."

Saying it will boost growth to new trajectory, Hiranandani added, "A wave of next gen reforms has set the stage for years of high growth for the real estate sector. Today's rate cut of 35 bps is yet another initiative that is propelling real estate sector on a new growth trajectory. It has been observed that, despite the reduction in repo rates by the RBI in the previous reviews, it did not have any significant impact on lending rates.

Going forward, it is imperative for banks to reduce the lending rates and ensure that the home loan borrowers reap the benefits of this move. Real estate being a highly cost sensitive sector, demand will only pick up if the cut is substantial to result in significant cost savings. The rate reduction will also provide the much-needed stimulus to build upon the various initiatives announced by the Government recently about reviving the demand in the realty sector. This will also bring back fence-sitters who were waiting for the perfect opportunity to invest in their dream home. We are sure to see the positive upturn in the sector."

On the whole, this rate cut along with various other reforms announced recently, is expected to cheer up developers as well as buyers in the real estate sector. 

Watch Zee Business video here:

Welcoming the decision Manoj Paliwal, CFO, Omkar Realtors & Developers said, " As the residential sector is already under distress with slower sales, RBI’s decision to bring down the lending rate by 35 basis points is resultant ought of concern about real estate sector growth, its performance, and outlook, and the urgency to take measures to revive growth in the real estate sector. RBI's move will reduce the outgo in terms of EMI for the borrowers benefitting the home-buyers’ which will surely boost confidence in the segment bringing in the much-awaited momentum in sales."

Stating this move an optimistic step for the Indian economy as a whole, Nabil Patel, Director, DB Realty said, "The repo rate cut by 35 bps to 5.4% comes as an optimistic step for the Indian economy as a whole. Being the fourth consistent rate cut of the year, this will play a significant role in bringing down the home loan rates and help ease the liquidity crunch in the sector. We anticipate that this announcement will encourage people to buy their dream homes."